LIKE IT? FORWARD TO A FRIEND!

Hi ,

I hope you're well. My new and improved monthly China newsletter is back! 😜

I’ll continue covering Chinese consumers, digital marketing and retail, as well as China’s latest tech developments. Below is my selection of China digital insights for November, hope you find it useful.

Meanwhile, if you are looking to launch a research project, need marketing help, or plan to bring your global team to China for a learning expedition - drop me a note, and I’ll link you with my team.

I read and reply to all emails.

Looking forward to collaborating with you more in 2025!

Cheers

Ashley

• After 18 months of limited action, China's policymakers introduced significant economic measures recently to counter deflation and weak sentiment. 

• While stock markets surged soon after, China will still be needing more stimulus to overcome deflation.

• Media reports indicate that the central government might soon borrow an additional 2 trillion yuan ($280 billion), about 1.5% of GDP. 

• Half of this will assist local authorities with their debts, while the other half will support consumers, including direct payments to families with multiple children.

• Consumer confidence in China has been approaching a historic low. 

• China's consumer confidence index fell to 86 in July, near the all-time low of 85.5 from November 2022.

• Chinese consumers are still cautious about spending due to worries about wages and job security as layoffs continue.

• Despite ongoing efforts, more strong economic measures are urgently needed.

But what exactly are Chinese people buying? Let’s take a look at some Chinese consumer behaviour trends that stood out.

1. Chinese GenZ buy feelings

Young Chinese consumers are increasingly spending on "useless" items for their emotional value, with nearly 30% willing to pay for mood-enhancing products. (Read more here)

2. Chinese middle class out of love with luxury?

The Chinese luxury brands market is tanking, with LVMH's Q3 revenue in Asia (sans-Japan) down 16% and Kering expecting a 30% drop in H2 revenue. (Read more here)

3. Young Chinese are working to travel

Young Chinese are saving for travel, with 71% of Gen Z prioritizing it even over home ownership. (Read more here)

4. Chinese families and singles are buying up home appliances

China's trade-in program for home appliances has increased sales to over 69 billion yuan ($9.6 billion) since August. Many prioritise jobs offering enjoyment and travel over property ownership. (Read more here)

5. Chinese are choosing (Korean) food over makeup

Korean beauty products in China fell to a 14.2% share last year, while Korean food exports increased 5.2% to 7.8 billion yuan ($1 billion). (Read more here)

1. 2024 McKinsey China Consumer Report

Consumer confidence is low, with single-digit consumption growth in China, leaving marketers concerned. (Read more here)

2. 2024 China Consumer Brand Growth Power Survey

Some brands in China are exiting, others are thriving, and some are struggling on the brink of loss. (Read more here)

• No more price wars in China? For months, experts have been talking about how e-commerce platforms, FMCG industry and brands are in a constant price-cutting battle.

• Top policymakers are now working on boosting consumer spending and cutting down on "vicious competition." 

• Meanwhile, e-commerce giants are stretching out sales and teaming up strategically.

• A Statista survey reveals Chinese consumers prefer domestic online shopping, with JD at 61%, Taobao at 54%, Tmall at 47%, and Amazon lagging behind at 39%.

• Consumer preference aligns with economic performance, with JD ranking 40th globally at 1 trillion yuan ($154 billion) revenue, surpassing Alibaba's $943 billion yuan ($132.4 billion).

• In September 2024, China's retail sales grew 3.2% YoY to 411.12 billion yuan ($57 billion), showing some growth on a low 2023 baseline.

• Both online and offline consumer spending are what’s driving retail growth. 

• Online retail sales from January to September 2024 reached 10.89 trillion yuan ($1.5 trillion), up 8.6% yearly, with physical goods making up only 25.7% of total retail sales.

• From January to September, retail sales in large convenience stores, specialty stores, and supermarkets increased yearly by 4.7%, 4.0% and 2.4%, while department stores and brand exclusive stores saw decreases of 3.3% and 1.7%.

1. Ghost Malls in China

Today department stores in second-tier cities are a mixed bag—some are bustling with events, pop up stores and trendy coffee shops, while others are pretty empty. (Watch here)

2. Visit the trendiest mall in Chengdu with me

COSMO, a trendy mall in Chengdu is a good example of how Chinese offline retail is evolving, making stores a lively spot for niche culture, unique fashion and brands. (Watch here)

• China's tech development is at an all-time high. China's trade surplus in manufactured goods is the largest since the 50s. 

• Companies like BYD and CATL lead in EVs, batteries, and solar panels, driving growth as China addresses its real estate challenges.

• China's progress under "Made in China 2025" is evident. While facing challenges with advanced semiconductors and AI, it leads in EVs, automotive software and lithium battery tech. 

• The country excels in LNG shipbuilding, high-speed rail, solar panels, and innovative drugs.

• China’s tech giants struggle to get advanced AI chips, and many countries are blocking its access to top chip-making equipment from companies like ASML.

• But despite years of tariffs and sanctions, China is already progressing in future industries. 

• Bloomberg research shows the "Made in China 2025" scheme has been successful, with China leading in five key technologies and already catching up in seven others.

• Globally, more people are driving Chinese EVs, using Chinese smartphones, and harnessing energy from Chinese solar panels.

1. AI: China cutting costs for AI?

Chinese AI companies like 01.ai and DeepSeek are cutting costs by using smaller data sets and affordable engineers to compete despite US chip restrictions. (Read more here)

2. Robotics: New advanced robot debut in China

"Konka-1," just developed in Chengdu, is an ultra-lightweight humanoid robot using 60% local components, set for debut this year and mass production by late 2025. (Read more here)

3. 6G: Even more development for 6G

China Mobile, with partners, introduced a 6G baseband prototype for the Sub7GHz band, highlighting advancements in sensory, computing, and communications integration. (Read more here)

4. EV: EU Tariffs on Chinese EV imports get final nod

The European Commission has given final approval to tariffs on Chinese EVs, with duties from 7.8% to 35.3%, due to state subsidies undercutting European manufacturers. (Read more here)

1. Our Next Reality: How the AI Metaverse Will Change the World

Learn about AI's role in creating an immersive future and the importance of open, interconnected spaces in the metaverse. (Watch here)

2. Innovation Factory: China’s Digital Playbook for Global Brands​

China excels in innovation and cutting-edge management, offering lessons for Western brands through its digital transformation and unique e-commerce strategies. (Read here)

LIKE IT? FORWARD TO A FRIEND!